That said, the blockade of ports and oil fields in Libya have curtailed the daily oil output to 0.78 mbpd in January from 1.15 mbpd. The production may dip further to 0.45-0.25 mbpd if the situation remains unresolved.
We believe the recent US sanction on Rosneft will have a minimal impact on oil prices.
However, short-term speculative gains are not ruled out yet as major buyers of Venezuelan oil have already shifted to other sources.
Since the last three days, the number of new infections have been falling, which has lit a fire under crude. The easing worries on coronavirus
may boost investment sentiment with China pledging more stimulus to revive economy from virus impact. We expect crude oil prices to rise in the short term, but are likely to run into a resistance at $58/barrel.
We believe, the problem with Crude Oil is not supply but demand. This is going to weigh on the crude oil producers. And, demand from cars is certainly reducing the world over.
The writer is the Head - PCG & Capital Market Strategy, HDFC Securities.
Disclaimer: Views expressed are personal. They do not reflect the view/s of Business Standard.